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Financial independence is what we all desire for at the end of our working lives. Now days, even younger people are striving to have this situation. This term means a situation when we need not worry about earning money.
For some people financial independency does not mean freedom from the drudgery of working for money. For those people, financial freedom means not depending on others to pay your bills or freedom from all debt. And for all other people, it means what is its true meaning that is freedom from having to work for income.
But actually financial freedom is the situation which involves all of these three conditions. Most of the people do not rely on others to pay their bills but still most of them are struggling hard to put off their debts. To do that, they need to work hard to pay off the debts and for living. So, it means financial independence is not easily achieved.
When you think about a situation when you do not want work hard for earning livelihood, there can be two scenarios. In the first situation, either you have that much accumulation or inheritance of money that all of your expenses will be taken care of from that deposit. In the second situation, you have assets or source of income which can earn you passive income which is equal to or more than your expenses.
When you need not work for money, the condition is known as retirement. There is crossover point when you strive for financial independency. If you spend about $2000 in a month and your passive income is $2001, this situation is called cross over point and you have achieved financial independence. At this point, you can stop working for earning money but most people who love their job keep working and that makes them rich.
The excellent way to gain financial independence is to building assets and decreasing liabilities. Assets should be such which earns you some money like the car you use, the house you live in are not assets for earning income. A property from which you can gain some rental income is an asset.
There is no age of gaining financial independence. It does not matter that you are old or young. It also doe not matter how much are your expenses or income. All that matters you need not worry about your next meal or roof over your head.
Some of the common sources of passive income which can help you gain financial independence can be rental property, bank fixed deposits, monthly income schemes, dividend from stock, royalty from books or blogs and other source.
Financial independency is the condition when can pursue freely what interest us without the stress to work for money. You can device your own ways to find your freedom from earning money.